Here Are 5 Things the Senate’s 2020 Budget Would Do

COMMENTARY Budget and Spending

Here Are 5 Things the Senate’s 2020 Budget Would Do

Mar 27th, 2019 5 min read

Commentary By

Justin Bogie @JustinBogie

Part-Time Senior Policy Analyst in Fiscal Affairs

David Ditch

Research Associate, Grover M. Hermann Center for the Federal

Congress should pursue reforms that balance the budget and redefine the role of the federal government. Omar Chatriwala/Getty Images

The Senate Budget Committee will move one step closer to producing a new budget this week when it meets for a mark-up hearing on its fiscal year 2020 budget resolution

The proposal as it exists now would take steps to avoid another irresponsible budget deal and would eliminate one particularly egregious budget gimmick. 

Yet the plan falls far short of what is required to rein in the massive federal budget expenditures and improve the country’s fiscal path.

Unlike typical congressional budgets, the fiscal year 2020 Senate budget delivers the bare minimum required by law, covering only five years rather than 10. 

In total, the proposal would spend $24.7 trillion over the next five years and collect $20.4 trillion in revenues. It would put budget deficits on a downward path, but would still leave the deficit near $750 billion in 2024. Debt held by the public would rise to $21.2 trillion under the Senate proposal, growing by $3.6 trillion.

While this proposal falls far short, the Senate Budget Committee has at least followed the law by introducing a budget resolution. 

CQ reported last week that the House Budget Committee may entirely forgo presenting any budget this year. This would violate the law, as the budget and appropriations process is a fundamental and statutory duty of Congress and should be completed each year. 

This neglect of duty calls for stronger enforcement measures to make sure budget deadlines are met. Such measures would give members of Congress a personal incentive to do their jobs—for instance, the “no budget, no pay” proposal, which would withhold lawmakers’ salaries until Congress finishes its budget job.

Here are five key takeaways from the fiscal year 2020 Senate budget resolution:

1. Keeps fiscal year 2020 discretionary spending at the Budget Control Act cap level. 

Like President Donald Trump’s 2020 budget, the Senate proposal would keep the Budget Control Act caps in place for 2020-2021. However, it would provide $67 billion in overseas contingency operations funding in 2020—less than 40 percent of the administration’s requested level, but more reflective of the military’s actual needs abroad. 

A better approach would be to remove the firewall between defense and nondefense spending and allow Congress the flexibility to prioritize resources as needed to appropriately fund defense, within the overall cap. 

2. Requires any spending cap deal to be fully paid for.

While the Senate budget resolution holds discretionary spending to the Budget Control Act cap levels in fiscal years 2020-2021, it foreshadows that the caps may be amended yet again. 

The most recent budget deal increased spending by $296 billion for 2018-2019, with only a tiny fraction of the new spending being paid for.

The resolution provides that the discretionary spending levels can be adjusted if Congress adopts legislation to raise the Budget Control Act caps. However, it requires that any amendment to the discretionary spending caps be fully paid for.

A fully paid for budget deal is the minimum requirement that another Budget Control Act amendment should have to meet. Any increases in discretionary spending should be offset with meaningful and immediate reforms to mandatory spending programs, not new revenues or accounting tricks that produce no real savings. 

3. Makes no major progress on mandatory spending reforms.

Mandatory or “autopilot” pilot programs like Social Security and health care programs make up about two-thirds of all federal spending.

While the country is spending too much in general, most of the federal government’s long-term spending growth occurs within mandatory programs. These programs are unsustainable by design and are driving the country deeper into debt.

The Senate budget proposal does little to address these programs. In total, the resolution would cut mandatory spending by $551 billion over the next five years. It offers no reforms to Social Security and provides little detail as to what reforms would be made to health care programs. 

The process used to make this budget resolution a reality is called reconciliation. While the resolution calls for over $550 billion in mandatory savings, the budget resolution instructs committees of jurisdiction to produce a mere $92 billion in deficit reduction through reconciliation.

Such modest reforms will do very little to change the nation’s unsustainable budget path. 

4. Eliminates ‘savings’ through ‘Changes in Mandatory Programs.’

Changes in Mandatory Programs are one of the most often-used budget gimmicks. On paper, they delay spending of mandatory funding for a year. Those “savings” are then used to increase discretionary spending.

In reality, most Changes in Mandatory Programs delay spending that was never going to occur in the first place. They generate no real savings and are simply an accounting gimmick used by Congress to spend more.

In 2019, the Senate was permitted to use up to $15 billion in phony Changes in Mandatory Programs savings. The 2020 Senate budget goes further, limiting these fake savings to $0 and requiring a three-fifths vote to overturn the point of order.

Eliminating this budget gimmick is a necessary step toward creating a more honest and transparent budget process. Lawmakers should go further and adopt restrictions to use Changes in Mandatory Programs through statute without provision to waive the rule.

5. Funds new transportation spending through higher taxes. 

The budget resolution includes a revenue increase relative to the baseline. Half of this increase is credited to “an effort to make the Highway Trust Fund solvent based on an overarching user-pay principle.” 

This points to an important issue for the 116th Congress, as surface transportation programs covered by the Highway Trust Fund will expire without congressional action. 

Currently, the trust fund is spending more than it takes in from revenue sources (primarily the gas tax), and will run out of money during fiscal year 2022. The most recent reauthorization law simply bailed out the fund through the “general fund,” which is code for “put it on the national credit card.” 

To avoid this happening again, trust fund taxes and spending must align. 

It is regrettable that the budget resolution seeks to do this through an increase in revenue. There are less harmful ways of increasing revenue, such as implementing tolls on the federal highway system instead of increasing the gas tax. 

But the best solution for the trust fund would be to reduce the federal role in local transportation projects, and to end the diversion of gas tax revenue that goes toward urban transit projects. 

Bolder Leadership Needed 

The 2020 Senate budget resolution moves in the right direction by requiring any Budget Control Act cap amendment to be fully paid for and by eliminating Changes in Mandatory Programs. Nonetheless, this budget does not balance and would do little to address the autopilot programs that are driving spending growth and the national debt. 

Congress should pursue reforms that balance the budget and redefine the role of the federal government. Taxpayers deserve bolder leadership.

This piece originally appeared in The Daily Signal